Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 08, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DRONE AVIATION HOLDING CORP. | |
Entity Central Index Key | 1,178,727 | |
Amendment Flag | false | |
Trading Symbol | DRNE | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,182,470 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash | $ 429,605 | $ 615,375 |
Accounts receivable - trade | 110,065 | |
Inventory, net | 925,867 | 991,697 |
Prepaid expenses and deposits | 65,563 | 103,008 |
Total current assets | 1,421,035 | 1,820,145 |
PROPERTY AND EQUIPMENT, at cost: | 175,328 | 253,444 |
Less - accumulated depreciation | (107,424) | (97,507) |
Net property and equipment | 67,904 | 155,937 |
OTHER ASSETS: | ||
Goodwill | 99,799 | 99,799 |
Intangible assets, net | 851,667 | 997,667 |
Total other assets | 951,466 | 1,097,466 |
TOTAL ASSETS | 2,440,405 | 3,073,548 |
CURRENT LIABILITIES: | ||
Accounts payable - trade and accrued liabilities | 121,018 | 205,359 |
Accounts payable due to related party | 173,666 | 171,981 |
Bank Line of Credit | 1,500,000 | 1,000,000 |
Related party convertible note payable | 1,500,000 | 1,000,000 |
Total current liabilities | 3,294,684 | 2,377,340 |
LONG TERM LIABILITIES: | ||
Related party convertible note payable | 3,000,000 | 3,000,000 |
TOTAL LIABILITIES | 6,294,684 | 5,377,340 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Common stock, $.0001 par value; authorized 300,000,000 shares; 9,182,470 and 9,182,470 shares issued and outstanding, at June 30, 2018 and December 31, 2017, respectively | 918 | 918 |
Additional paid-in capital | 28,895,970 | 27,692,067 |
Retained Deficit | (32,751,167) | (29,996,777) |
Total stockholders' equity (deficit) | (3,854,279) | (2,303,792) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | 2,440,405 | 3,073,548 |
Convertible Preferred stock, Series A | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series B | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series B-1 | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series C | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series D | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series E | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series F | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value | ||
Convertible Preferred stock, Series G | ||
STOCKHOLDERS' EQUITY (DEFICIT): | ||
Convertible Preferred stock value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 9,182,470 | 9,182,470 |
Common stock, shares outstanding | 9,182,470 | 9,182,470 |
Convertible Preferred stock, Series A | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 595,000 | 595,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series B | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 324,671 | 324,671 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series B-1 | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 156,231 | 156,231 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series C | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 355,000 | 355,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series D | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 36,050,000 | 36,050,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series E | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 5,400,000 | 5,400,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series F | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 3,300,999 | 3,300,999 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Convertible Preferred stock, Series G | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 8,000,000 | 8,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 42,000 | $ 13,876 | $ 911,023 | $ 381,529 |
Cost of goods sold | 11,637 | 6,466 | 486,030 | 249,996 |
Gross profit | 30,363 | 7,410 | 424,993 | 131,533 |
General and administrative expense | 1,028,319 | 1,367,758 | 3,030,928 | 2,887,727 |
Loss from operations | (997,956) | (1,360,348) | (2,605,935) | (2,756,194) |
Other income (expense) | ||||
Derivative Gain | 298,050 | 1,051,848 | ||
Interest expense | (78,144) | (700,407) | (148,455) | (1,181,753) |
Total other expense | (78,144) | (402,357) | (148,455) | (129,905) |
NET LOSS | (1,076,100) | (1,762,705) | (2,754,390) | (2,886,099) |
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (1,076,100) | $ (1,762,705) | $ (2,754,390) | $ (2,886,099) |
Weighted average number of common shares outstanding - basic and diluted | 9,182,470 | 8,698,081 | 9,182,470 | 8,698,081 |
Basic and diluted net loss per share | $ (0.12) | $ (0.20) | $ (0.3) | $ (0.33) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (2,754,390) | $ (2,886,099) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization expense of debt discount | 1,092,492 | |
Gain on derivative liability | (1,051,848) | |
Depreciation | 20,535 | 17,561 |
Loss on disposal of property and equipment | 9,428 | |
Amortization expense of intangible assets | 146,000 | 146,000 |
Stock based compensation | 1,203,903 | 1,238,168 |
Changes in current assets and liabilities: | ||
Accounts receivable | 110,065 | 369,451 |
Inventory | 65,830 | (176,464) |
Prepaid expenses and other current assets | 37,445 | 63,162 |
Accounts payable and accrued expense | (84,341) | (196,908) |
Due from related party | 1,685 | 89,261 |
Deferred revenue | ||
Net cash used in operating activities | (1,243,840) | (1,295,224) |
INVESTING ACTIVITIES: | ||
Cash received from sale of vehicle | 60,000 | |
Cash paid on fixed assets | (1,930) | (675) |
Net cash provided by (used in) investing activities | 58,070 | (675) |
FINANCING ACTIVITIES: | ||
Proceeds from related party convertible note payable | 500,000 | |
Proceeds from bank line of credit | 500,000 | |
Net cash provided by financing activities | 1,000,000 | |
NET DECREASE IN CASH | (185,770) | (1,295,899) |
CASH, beginning of period | 615,375 | 2,015,214 |
CASH, end of period | 429,605 | 719,315 |
Cash paid during the six months ended June 30: | ||
Interest | 144,347 | |
Noncash investing and financing activities for the six months ended June 30: | ||
Conversion of Series A preferred stock to common stock | $ 25 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Basis of Presentation [Abstract] | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The following unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of December 31, 2017 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does not include all of the information and footnotes required for complete annual financial statements. The consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 “Revenue Recognition” (Topic 605) and requires entities to recognize revenues when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. We adopted Topic 606 as of January 1, 2018 using the modified retrospective transition method. We recognized the cumulative effect of adopting this guidance as an adjustment to our opening balance of retained earnings. Prior periods will not be retrospectively adjusted. The adoption of Topic 606 does not have a material impact to our consolidated financial statements, including the presentation of revenues in our Consolidated Statements of Operations. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2018 | |
Going Concern [Abstract] | |
GOING CONCERN | 2. GOING CONCERN The accompanying consolidated financial statements and notes have been prepared assuming the Company will continue as a going concern. For the six months ended June 30, 2018, the Company incurred a net loss of $2,754,390, generated negative cash flow from operations, has an accumulated deficit of $32,751,167 and working capital deficit of $1,873,649. These circumstances raise substantial doubt as to the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon the Company’s ability to create and market innovative products, raise capital, reduce debt or renegotiate terms, and to sustain adequate working capital to finance its operations. The failure to achieve the necessary levels of profitability and cash flows or obtain additional funding would be detrimental to the Company. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 3. RELATED PARTY TRANSACTIONS The Company accounts for related party transactions in accordance with ASC 850 (“Related Party Disclosures”). A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party. On November 10, 2017, the Company and Global Security Innovative Strategies, LLC (“GSIS”), a related party, entered in an agreement whereby GSIS will provide business development support and general consulting services for sales opportunities with U.S. government agencies and other identified prospects and consulting support services for the Company’s role and activities as part of the Security Center of Excellence in Orlando, Florida. The agreement was for a period of six months beginning on November 1, 2017 and is now month-to-month by oral agreement. The Company agreed to pay GSIS a fee of $10,000 per month and will evaluate the fee after 90 days. The Company agreed to pay the expenses of GSIS incurred in connection with the performance of its duties under the agreement. Either party may terminate or renew the agreement at any time, for any reason or no reason, upon at least 30 days’ notice to the other party. David Aguilar, a member of the Company’s board of directors, is a principal at GSIS. As of June 30, 2018, and December 31, 2017, there was $173,666 and $171,981 accrued interest payable, respectively, to related parties on convertible notes payable. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2018 | |
Inventory [Abstract] | |
INVENTORY | 4. INVENTORY Inventories are stated at the lower of cost or market, using the first-in first-out method. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. We regularly review inventory quantities on hand, future purchase commitments with our supplies, and the estimated utility of our inventory. If the review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of goods sold. Inventory consists of the following at June 30, 2018 and December 31, 2017: June 30, 2018 December 31, Raw Materials $ 108,427 $ 114,119 Work in Progress 391,376 482,770 Finished Goods 413,854 398,912 In Transit 21,782 5,468 Less valuation allowance (9,572 ) (9,572 ) Total $ 925,867 $ 991,697 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 5. PROPERTY AND EQUIPMENT Property and equipment is recorded at cost when acquired. Depreciation is provided principally on the straight-line method over the estimated useful lives of the related assets, which is 3-7 years for equipment, furniture and fixtures, hardware and software and leasehold improvements. During the six months ended June 30, 2018, the Company invested $1,930 in shop machinery and equipment. During that same time period, the company sold a company vehicle for $60,000 cash and wrote off several items of abandoned equipment resulting in a $9,428 loss on disposal of assets. Depreciation expense was $20,535 and $17,561 for the six months ended June 30, 2018 and 2017, respectively. Property and equipment consists of the following at June 30, 2018 and December 31, 2017: June 30, December 31, Shop machinery and equipment $ 87,534 $ 87,704 Computers and electronics 30,466 35,270 Office furniture and fixtures 37,814 37,814 Vehicle 0 73,142 Leasehold improvements 19,514 19,514 175,328 253,444 Less - accumulated depreciation (107,424 ) (97,507 ) $ 67,904 $ 155,937 |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2018 | |
Intangible Assets [Abstract] | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS On July 20, 2015, the Company, through its wholly-owned subsidiary Drone AFS Corp., purchased substantially all the assets of Adaptive Flight, Inc. (“AFI”), a Georgia corporation. The Company purchased assets, including, but not limited to, intellectual property, licenses and permits, including commercial software licenses for the “GUST” (Georgia Tech UAV Simulation Tool) autopilot system and other transferable licenses which include flight simulation and fault tolerant flight control algorithms. The Company paid $100,000 in immediately available funds and $100,000 to be held in escrow. In addition, the Company issued 150,000 shares of unregistered common stock valued at $8.40 per share, on a post-October 29, 2015 reverse stock split basis, on the date of agreement, to be held in escrow. The Company had a milestone of twelve months to complete a technology integration plan, the non-completion of which could result in the return of the purchased assets and termination of the Company’s obligations to release the escrow cash and shares. Additional milestones included exclusive, no-cost and perpetual licenses to all contributing intellectual property included or related to the purchased assets. As such time as all milestones were met, one-half of the escrow shares were to be released to AFI. Upon termination of the escrow agreement, anticipated to be twelve months from the closing of the asset purchase, if all milestones had been met, the remaining escrow shares would be released to AFI; but if all milestones have not been met, the escrow cash and escrow shares would be released to the Company and the purchased assets would be returned to AFI. According to the terms of the Escrow Agreement, if the escrow share value was less than $1,400,000, the Company must issue an additional number of unregistered shares, not to exceed 50,000 shares. At December 31, 2015, the value of the 150,000 shares was $3.23 per share, or $484,500. The Company recorded $161,500 as an additional liability and expense at December 31, 2015 for the cost of 50,000 shares at $3.23 per share. On June 3, 2016, the Integration Plan was deemed to be completed. At June 3, 2016, the value of the 150,000 shares was $3.01 per share, or $451,150. The additional liability was reduced to $150,500 for the cost of 50,000 shares at $3.01 per share. The Company recorded the $11,000 reduction in the additional liability through the statement of operations at June 3, 2016. The Company began amortizing the $1,460,000 of purchased assets over a sixty-month period on June 3, 2016 in the amount of $24,333 per month. Total amortization expense for the six months ended June 30, 2018 was $146,000. The remaining unamortized balance of $851,667 is estimated be amortized in the estimated amounts of $146,000 during 2018 and $292,000 per year for 2019 through 2020 and $121,667 in 2021. The asset acquisition did not qualify as a business combination under ASC 805-10 and has been accounted for as a regular asset purchase. |
Related Party Convertible Notes
Related Party Convertible Notes Payable and Derivative Liability | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Convertible Notes Payable and Derivative Liability [Abstract] | |
RELATED PARTY CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY | 7. RELATED PARTY CONVERTIBLE NOTES PAYABLE AND DERIVATIVE LIABILITY On September 29, 2016, the Company issued Convertible Promissory Notes Series 2016 due October 1, 2017 in the aggregate principal amount of $3,000,000 in a private placement to the Chairman of the Board and the Chairman of the Strategic Advisory Board of the Company, both of whom are greater than 10% shareholders of the Company. The notes bear interest at a rate of six percent (6%) per annum. The Company may prepay the notes at any time without penalty. If the Company does not prepay a note in full or the holder does not convert the note before the maturity date, the Company may pay the outstanding principal amount and any accrued and unpaid interest on the maturity date with cash or with common stock or through a combination of cash and stock at the Company’s discretion. The conversion price of the notes is the lesser of $3.00 per share or eight-five percent (85%) of the lowest per share purchase price of common stock in the next sale of common stock in which the Company receives gross proceeds of an amount greater than or equal to $3,000,000. On August 3, 2017 (the “Effective Date”), the Company entered into amendments (the “Convertible Note Amendments”) with the owners and holders of the following convertible promissory notes issued by the Company (the “Series 2016 Convertible Notes”): ● Convertible Promissory Note in the original principal amount of $1,500,000 issued by the Company on September 29, 2016 to Frost Gamma Investments Trust (“Frost Gamma”). Frost Gamma is a trust that is controlled by Dr. Phillip Frost, a substantial shareholder of the Company; and ● Convertible Promissory Note in the original principal amount of $1,500,000 issued by the Company on September 29, 2016 to Jay H. Nussbaum, the Company’s Chief Executive Officer and Chairman of the Board of Directors. The Convertible Note Amendments extend the maturity date for each of the Series 2016 Convertible Notes to April 1, 2019 (the “Maturity Date”) and revise the conversion price to mean $1.00 per share subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. Accordingly, the notes have been reclassified as long-term debt. Consistent with the original terms of the Series 2016 Convertible Notes, interest accrues at the rate of 6% interest per annum and is payable on the Maturity Date. The accrued interest is payable at the holders’ option in cash or shares of our common stock valued at the $1.00 per share conversion price. The Convertible Note Amendments provide that an event of default in the City National Bank Loan will be treated as an event of default under the Series 2016 Convertible Notes. On November 9, 2017, the Company entered into amendments (the “November 2017 Convertible Note Amendments”) with the owners and holders of the Series 2016 Convertible Notes to permit the payment of, at the holders’ election, accrued and unpaid interest either in monthly or quarterly payments at any time after the Effective Date. Accrued interest may be paid with: (i) cash; (ii) the issuance and delivery to the holder of shares of common stock of the Company at the conversion price provided for in the Series 2016 Convertible Note; or (iii) any combination of cash and shares of Common Stock, as determined by the holder in its sole discretion. On March 23, 2018, the Company entered into amendments (the “March 2018 Convertible Note Amendments”) with the owners and holders of the Series 2016 Convertible Notes to extend the maturity date from April 1, 2019 until October 1, 2020. The Company evaluated the modification under ASC 470-50 and determined that is not qualified as an extinguishment of debt. As of June 30, 2018, and December 31, 2017, $165,617 and $166,356 accrued interest has been recorded, respectively. The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does not have a beneficial conversion feature. |
Revolving Line of Credit
Revolving Line of Credit | 6 Months Ended |
Jun. 30, 2018 | |
Revolving Line of Credit [Abstract] | |
REVOLVING LINE OF CREDIT | 8. REVOLVING LINE OF CREDIT On August 2, 2017, the Company issued a promissory note to City National Bank of Florida (“CNB”) in the principal amount of $2,000,000, the CNB Note, with a maturity date of August 2, 2018. The note evidences a revolving line of credit with advances that may be requested by the Company until the maturity date of August 2, 2018 so long as no event of default exists under the note, the Company or Mr. Nussbaum does not cease doing business, Mr. Nussbaum does not seek to revoke or modify his guarantee of the Note, the Company does not misapply the proceeds of this loan or CNB in good faith does not believe itself insecure. The CNB Note bears interest at a variable rate equal to 0.250 percentage points over the Wall Street Journal Prime Rate payable monthly. The Company will pay to CNB a late charge of 5.0% of any monthly payment not received by Lender within 10 calendar days after its due date. The Company may prepay the note at any time without penalty. In the event of a default, the interest rate will increase to the highest lawful rate. The Company is obligated to maintain depository accounts with CNB with a minimum average annual balance of $600,000. In the event the Company does not maintain this account balance, CNB may charge the Company a fee equal to 2% of the deficiency as additional interest under the note. The CNB Note is personally guaranteed by Mr. Nussbaum, the Company’s Chief Executive Officer pursuant to written guarantee in favor of CNB (the “CNB Guarantee”). Mr. Nussbaum and the Company are obligated to maintain an unencumbered liquidity of no less than $6,000,000 in the form of cash, repurchase agreements, certificates of deposit or marketable securities acceptable to CNB. In addition, to secure our obligations under the note, we entered into a security agreement in favor of CNB (the “Security Agreement”) encumbering all of our accounts, inventory and equipment along with an assignment of a bank account we maintain at CNB with an approximate balance of $90,000. As of June 30, 2018, $1,500,000 has been drawn against the line of credit. Accrued interest of $8,049 has been recognized as of June 30, 2018. Indemnification Agreement On August 3, 2017, the Company entered into an Indemnification Agreement with Mr. Nussbaum in order to indemnify and defend him to the fullest extent permitted by law for any claim, expense or obligation which might arise as a result of his guarantee of the CNB Note. |
Series 2017 Secured Convertible
Series 2017 Secured Convertible Note - Related Party | 6 Months Ended |
Jun. 30, 2018 | |
Series 2017 Secured Convertible Note - Related Party [Abstract] | |
SERIES 2017 SECURED CONVERTIBLE NOTE - RELATED PARTY | 9. SERIES 2017 SECURED CONVERTIBLE NOTE – RELATED PARTY On August 3, 2017, the Company issued a Secured Convertible Promissory Note Series 2017 due August 2, 2018 in the aggregate principal amount of $2,000,000 (the “Series 2017 Convertible Note”) in a private placement to Frost Nevada Investments Trust (“Frost Nevada”). Frost Nevada is a trust that is controlled by Dr. Frost, a substantial shareholder of the Company. The note evidences a revolving line of credit with advances that may be requested by the Company until the maturity date of August 2, 2018 so long as no event of default exists under the loan. The Company may request advances of principal under this note equal to and at the same time as it requests advances, if any, pursuant to the CNB Note. The note bears interest at a variable rate equal to 0.250 percentage points over the Wall Street Journal Prime Rate. The Company may prepay the notes at any time without penalty. If the Company does not prepay the note in full or the holder does not convert the note before the maturity date, the Company may pay the outstanding principal amount and any accrued and unpaid interest on the maturity date with cash or with common stock or through a combination of cash and stock at Frost Nevada’s discretion. The conversion price under the note is $1.00 per share subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. The Series 2017 Convertible Note is secured by a security interest in all the Company’s assets. This security interest is subordinate to the security interest of CNB discussed in Footnote #8 above. As of June 30, 2018, $1,500,000 has been drawn against the line of credit. Accrued interest of $8,049 has been recognized as of June 30, 2018. The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting. The Company therefore performed an analysis to determine if the conversion option was subject to a beneficial conversion feature and determined that the instrument does not have a beneficial conversion feature. |
Shareholders' Equity
Shareholders' Equity | 6 Months Ended |
Jun. 30, 2018 | |
Shareholders' Equity [Abstract] | |
SHAREHOLDERS' EQUITY | 10. SHAREHOLDERS’ EQUITY On August 3, 2017, the Company entered into an amendment to the August 24, 2014 Independent Contractor Agreements it entered into with Dr. Philip Frost and Steven Rubin who serve as members of the Company’s Strategic Advisory Board (the “SAB Amendments”). The SAB Amendments extend the term of the agreements from May 1, 2017 until April 30, 2018 and provide for the following equity based compensation: (a) for Dr. Frost, a warrant to purchase 2,000,000 shares of the Company’s Common Stock (the “Frost Warrant”) and an award of 150,000 shares of the Company’s unregistered restricted Common Stock and (b) for Mr. Rubin, an award of 100,000 shares of the Company’s unregistered restricted Common Stock. The restricted stock vests upon the occurrence of a change of control (as defined in the SAB Amendments). The Warrant has a term of five years and exercise price of $1.00 per share subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. The Company recognized $22,500 expense for the pro rata portion of shares earned by the two members during the six months ended June 30, 2018, amortizing the expense over the 12 months of the service agreement regardless of the vesting condition. In September 2016, the Company issued 1,349,000 shares of restricted common stock outside of the 2015 Equity Plan to Jay Nussbaum, Felicia Hess, Daniyel Erdberg, Kendall Carpenter, Mike Silverman and Reginald Brown pursuant to Stock Award Agreements. The shares will vest upon consummation of a significant equity and/or debt financing of at least $5,000,000 provided that the holder remains engaged by the Company through the vesting date. On August 3, 2017, these awards were modified so that the restrictions set forth in the RSA lapse upon the earlier of (i) consummation of a significant equity and/or debt financing from which the Company receives gross proceeds of at least $7,000,000 or (ii) a change in control (as defined in the RSA Amendment), provided that, in either case, the holder remains engaged by the Company through the date of such event. The Company does not believe the modified vesting conditions are probably of being achieved, and as such, no stock-based compensation expense has been recorded. The Company will reassess whether achievement of the vesting conditions is probable at each reporting date. If it is probable, stock-based compensation will be recognized. On March 28, 2017, these awards were modified in recognition of the Company securing a substantial sales order and recent business development activity and vested on that date. On that date, the awards were determined to be probable for vesting and stock-based compensation was recognized based on the fair market value of the stock on March 28, 2017. The Company recorded $944,300 in stock-based compensation for these awards. |
Employee Stock Options
Employee Stock Options | 6 Months Ended |
Jun. 30, 2018 | |
Employee Stock Options [Abstract] | |
EMPLOYEE STOCK OPTIONS | 11. EMPLOYEE STOCK OPTIONS On May 16, 2018, upon approval of the Company’s board of directors, the Company granted outside its 2015 Equity Plan, 460,000 options to four employees. Reginald Brown, Jr. was issued 200,000 options and Kendall Carpenter was issued 130,000 options which were immediately vested, are exercisable at an exercise price of $1.00 per share and expire May 16, 2022. Two engineers received a total of 130,000 shares which vest 50% after one year and the remaining 50% after two years, are exercisable at an exercise price of $1.00 per share and expire May 16, 2022. During the six months ended June 30, 2018, $154,148 compensation expense was recognized on these 460,000 options with a remaining balance of $47,933 to be recognized over the vesting period. On March 28, 2018, upon approval of the Company’s board of directors, the Company granted outside its 2015 Equity Plan, 100,000 options each to a newly-appointed director, Robert Guerra. These options vest 50% one year after the date of grant and the remaining 50% two years after the date of grant provided the director is still actively involved with the Company. The options are exercisable at an exercise price of $1.00 per share and expire on March 28, 2022. During the six months ended June 30, 2018, $7,394 compensation expense was recognized on these 100,000 options with a remaining balance of $31,195 to be recognized over the vesting period. On December 13, 2017, upon approval of the Company’s board of directors, the Company issued outside its 2015 Equity Plan, 100,000 options each to two newly-appointed directors, or a total of 200,000 options. These options vest 50% after one year and the remaining 50% after two years provided the director is still actively involved with the Company. The options are exercisable at an exercise price of $1.00 per share and expire on December 13, 2021. During the six months ended June 30, 2018 and twelve months ended December 31, 2017, $36,426 and $3,593, respectively, compensation expense was recognized on these 200,000 options with a remaining balance of $59,771 to be recognized over the vesting period. During 2016, the Company granted 10,000 options to an employee with two-year vesting and an exercise price of $3.00 and an expiration date of December 6, 2019. The Company recognized $2,210 in compensation for the six months ended June 30, 2018. No additional compensation will be recognized on these options which were cancelled due to the termination of the employee. On June 1, 2015, the Company issued an option award to an employee for 37,500 shares vesting over three years with an exercise price of $10.80 and expiration date of May 4, 2019. During the six months ended June 30, 2018, $14,369 compensation expense was recognized on these 37,500 options which are now fully vested. On January 9, 2017, the Company issued an option to purchase 100,000 shares of common stock with an exercise price of $2.90 per share to a director. The option vests 50,000 after one year from grant date and another 50,000 two years from grant date with an expiration date of four years from grant date provided that the Director is still providing service to the Company. During the six months ended June 30, 2018, $22,556 compensation expense was recognized on these 100,000 options with a remaining balance of $22,557 to be recognized over the vesting period. The Company used the Black-Scholes option pricing model to estimate the fair value on the date of grant of the 560,000 options granted during the six months ended June 30, 2018. The following table summarizes the assumptions used to estimate the fair value of the 560,000 stock options granted during the six months ended June 30, 2018 on the date of grant. 2018 Expected dividend yield 0 % Expected volatility 80-97 % Risk-free interest rate 2.48-2.85 % Expected life of options 4.00 years Under the Black-Scholes option pricing model, the fair value of the 560,000 options granted during the six months ended June 30, 2018 is estimated at $240,670 on the date of grant. During the six months ended June 30, 2018, $161,542 compensation expense was recognized on these 560,000 options. The following table represents stock option activity as of and for the six months ended June 30, 2018: Number of Options Weighted Weighted Aggregate Intrinsic Outstanding – December 31, 2017 7,945,000 $ 1.38 3.50 Exercisable – December 31, 2017 7,627,500 $ 1.35 3.50 $ 0 Granted 560,000 $ 1.00 Cancelled or Expired (317,500 ) $ 5.03 Outstanding – June 30, 2018 8,187,500 $ 1.21 3.16 $ 0 Exercisable – June 30, 2018 7,707,500 $ 1.21 3.14 $ 0 |
Warrants
Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Warrants [Abstract] | |
WARRANTS | 12. WARRANTS The following table represents warrant activity as of and for the period ended June 30, 2018: Number of Warrants Weighted Weighted Aggregate Intrinsic Outstanding – December 31, 2017 2,232,500 $ 1.36 4.34 Exercisable – December 31, 2017 2,232,500 $ 1.36 4.34 $ 0 Granted 0 $ 0 Forfeited or Expired (37,500 ) $ 10.00 Outstanding – June 30, 2018 2,195,000 $ 1.21 3.91 $ 0 Exercisable – June 30, 2018 2,195,000 $ 1.21 3.91 $ 0 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES On November 17, 2014, the Company entered into a 60-month lease for 5,533 square feet of office and manufacturing space at 11651 Central Parkway Suite 118, Jacksonville, Florida, with an anticipated lease commencement date of February 1, 2015. The actual commencement date was July 1, 2015 and the lease was amended to 61 months expiring July 31, 2020. The monthly rent, including operating expenses and sales tax, for each year of the initial lease term is estimated to be $5,915. Anticipated total rent during the term of the lease is as follows: Year 2018 - $ 36,150 Year 2019 - $ 77,309 Year 2020 - $ 45,651 Rent expense was $44,474 for the six months ended June 30, 2018. On May 16, 2016, Banco Popular North America (“Banco”) filed a lawsuit in Duval County, Florida in the Circuit Court of the Fourth Judicial Circuit against Aerial Products Corporation d/b/a Southern Balloon Works (“Aerial Products”), Kevin M. Hess, LTAS, and the Company to collect on a delinquent Small Business Administration loan that Banco made in 2007 to Aerial Products with Mr. Hess as the personal guarantor. LTAS and the Company filed an Answer on June 30, 2016 and Responses to Interrogatories on December 16, 2016. The lawsuit is active and discovery is ongoing. It is our position that neither LTAS nor the Company are continuations of Aerial Products, and LTAS and the Company have denied all allegations made by Banco and will vigorously defend that position. The Company has evaluated the probability of loss as possible but the range of loss is unable to be estimated. Other than the Banco matter, there are no material claims, actions, suits, proceedings inquiries, labor disputes or investigations pending. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 14. SUBSEQUENT EVENTS On July 30, 2018, the Company took a draw of $150,000 from the CNB note and a draw of $150,000 from the Series 2017 Convertible Note which are described in Footnotes #8 and #9 above. |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory [Abstract] | |
Schedule of Inventory | June 30, 2018 December 31, Raw Materials $ 108,427 $ 114,119 Work in Progress 391,376 482,770 Finished Goods 413,854 398,912 In Transit 21,782 5,468 Less valuation allowance (9,572 ) (9,572 ) Total $ 925,867 $ 991,697 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | June 30, December 31, Shop machinery and equipment $ 87,534 $ 87,704 Computers and electronics 30,466 35,270 Office furniture and fixtures 37,814 37,814 Vehicle 0 73,142 Leasehold improvements 19,514 19,514 175,328 253,444 Less - accumulated depreciation (107,424 ) (97,507 ) $ 67,904 $ 155,937 |
Employee Stock Options (Tables)
Employee Stock Options (Tables) - Employee Stock Options [Member] | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items] | |
Schedule of assumptions used to estimate fair value stock options granted | 2018 Expected dividend yield 0 % Expected volatility 80-97 % Risk-free interest rate 2.48-2.85 % Expected life of options 4.00 years |
Schedule of stock option activity | Number of Options Weighted Weighted Aggregate Intrinsic Outstanding – December 31, 2017 7,945,000 $ 1.38 3.50 Exercisable – December 31, 2017 7,627,500 $ 1.35 3.50 $ 0 Granted 560,000 $ 1.00 Cancelled or Expired (317,500 ) $ 5.03 Outstanding – June 30, 2018 8,187,500 $ 1.21 3.16 $ 0 Exercisable – June 30, 2018 7,707,500 $ 1.21 3.14 $ 0 |
Warrants (Tables)
Warrants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Warrants [Abstract] | |
Schedule of warrant activity | Number of Warrants Weighted Weighted Aggregate Intrinsic Outstanding – December 31, 2017 2,232,500 $ 1.36 4.34 Exercisable – December 31, 2017 2,232,500 $ 1.36 4.34 $ 0 Granted 0 $ 0 Forfeited or Expired (37,500 ) $ 10.00 Outstanding – June 30, 2018 2,195,000 $ 1.21 3.91 $ 0 Exercisable – June 30, 2018 2,195,000 $ 1.21 3.91 $ 0 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies [Abstract] | |
Schedule of operating lease | Year 2018 - $ 36,150 Year 2019 - $ 77,309 Year 2020 - $ 45,651 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Going Concern (Textual) | |||||
Net loss | $ (1,076,100) | $ (1,762,705) | $ (2,754,390) | $ (2,886,099) | |
Accumulated deficit | (32,751,167) | (32,751,167) | $ (29,996,777) | ||
Working capital deficit | $ 1,873,649 | $ 1,873,649 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Nov. 10, 2017 | Jun. 30, 2018 | Dec. 31, 2017 |
Related Party Transactions (Textual) | |||
Payment for management fee | $ 10,000 | ||
Related party payment fee evaluation, term | Evaluate the fee after 90 days. | ||
Accrued interest payable to related parties | $ 173,666 | $ 171,981 |
Inventory (Details)
Inventory (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory [Abstract] | ||
Raw Materials | $ 108,427 | $ 114,119 |
Work in Progress | 391,376 | 482,770 |
Finished Goods | 413,854 | 398,912 |
In Transit | 21,782 | 5,468 |
Less valuation allowance | (9,572) | (9,572) |
Total | $ 925,867 | $ 991,697 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 175,328 | $ 253,444 |
Less - accumulated depreciation | (107,424) | (97,507) |
Property and equipment, net | 67,904 | 155,937 |
Shop machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 87,534 | 87,704 |
Computers and electronics [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 30,466 | 35,270 |
Office furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 37,814 | 37,814 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 0 | 73,142 |
Leasehold improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 19,514 | $ 19,514 |
Property and Equipment (Detai29
Property and Equipment (Details Textual) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 20,535 | $ 17,561 |
Loss on disposal of assets | 9,428 | |
Sale of vehicles for cash | $ 60,000 | |
Equipment [Member] | Minimum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 3 years | |
Equipment [Member] | Maximum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 7 years | |
Furniture and fixtures [Member] | Minimum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 3 years | |
Furniture and fixtures [Member] | Maximum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 7 years | |
Hardware and software [Member] | Minimum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 3 years | |
Hardware and software [Member] | Maximum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 7 years | |
Leasehold improvements [Member] | Minimum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 3 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Property and Equipment (Textual) | ||
Estimated useful life | 7 years | |
Shop machinery and equipment [Member] | ||
Property and Equipment (Textual) | ||
Amount invested in shop machinery and equipment | $ 1,930 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Jun. 03, 2016 | Jul. 20, 2015 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2015 | Dec. 31, 2017 |
Intangible Assets (Textual) | ||||||
Additional liability and expense | $ 11,000 | |||||
Amortizing of purchased assets | 1,460,000 | |||||
Payments to acquire assets | $ 24,333 | |||||
Amortization expense | 146,000 | $ 146,000 | ||||
Unamortized balance amount | 851,667 | $ 997,667 | ||||
Amortization estimated amounts year for 2018 | 146,000 | |||||
Amortization estimated amounts year for 2019 | 292,000 | |||||
Amortization estimated amounts year for 2020 | 292,000 | |||||
Amortization estimated amounts year for 2021 | 121,667 | |||||
Integration Plan [Member] | ||||||
Intangible Assets (Textual) | ||||||
Issued unregistered common stock, shares | 150,000 | |||||
Unregistered common stock per share | $ 3.01 | |||||
Escrow share value | $ 451,150 | |||||
Additional liability and expense | $ 150,500 | |||||
Cost of shares | 50,000 | |||||
Cost of shares price per share | $ 3.01 | |||||
Adaptive Flight, Inc. [Member] | ||||||
Intangible Assets (Textual) | ||||||
Escrow value | $ 1,400,000 | $ 484,500 | ||||
Issued unregistered common stock, shares | 50,000 | 150,000 | ||||
Unregistered common stock per share | $ 3.23 | |||||
Additional liability and expense | $ 161,500 | |||||
Cost of shares | 50,000 | |||||
Cost of shares price per share | $ 3.23 | |||||
Georgia Tech UAV Simulation Tool [Member] | ||||||
Intangible Assets (Textual) | ||||||
Amount paid among purchase | $ 100,000 | |||||
Escrow value | $ 100,000 | |||||
Issued unregistered common stock, shares | 150,000 | |||||
Unregistered common stock per share | $ 8.40 |
Related Party Convertible Not31
Related Party Convertible Notes Payable and Derivative Liability (Details) - USD ($) | Sep. 29, 2016 | Mar. 23, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Related Party Convertible Notes Payable and Derivative Liability (Textual) | ||||
Interest rate | 6.00% | |||
Accrued interest | $ 165,617 | $ 166,356 | ||
Convertible Promissory Notes [Member] | ||||
Related Party Convertible Notes Payable and Derivative Liability (Textual) | ||||
Principal amount | $ 3,000,000 | |||
Promissory note series due date | Oct. 1, 2017 | |||
Shareholders percentage | 10.00% | |||
Interest rate | 6.00% | |||
Convertible note payable and derivative liability, description | The conversion price of the notes is the lesser of $3.00 per share or eight-five percent (85%) of the lowest per share purchase price of common stock in the next sale of common stock in which the Company receives gross proceeds of an amount greater than or equal to $3,000,000. | |||
Conversion price per share | $ 1 | |||
Notes, maturity date | Apr. 1, 2019 | |||
Maturity date, description | The owners and holders of the Series 2016 Convertible Notes to extend the maturity date from April 1, 2019 until October 1, 2020. | |||
Common stock conversion price, description | The accrued interest is payable at the holders' option in cash or shares of our common stock valued at the $1.00 per share conversion price. | |||
Jay H. Nussbaum [Member] | Convertible Promissory Notes [Member] | ||||
Related Party Convertible Notes Payable and Derivative Liability (Textual) | ||||
Principal amount | $ 1,500,000 | |||
Frost Gamma [Member] | Convertible Promissory Notes [Member] | ||||
Related Party Convertible Notes Payable and Derivative Liability (Textual) | ||||
Principal amount | $ 1,500,000 |
Revolving Line of Credit (Detai
Revolving Line of Credit (Details) - USD ($) | Aug. 02, 2017 | Jun. 30, 2018 |
CNB Note [Member] | ||
Revolving Line of Credit (Textual) | ||
Aggregate principal amount | $ 2,000,000 | |
Maturity date | Aug. 2, 2018 | |
CNB Note maturity date, description | The note evidences a revolving line of credit with advances that may be requested by the Company until the maturity date of August 2, 2018. | |
Percentage of interest bears variable rate | 0.25% | |
Monthly payment, description | The Company will pay to CNB a late charge of 5.0% of any monthly payment not received by Lender within 10 calendar days after its due date. The Company may prepay the note at any time without penalty. | |
Line of credit drawn | $ 1,500,000 | |
Accrued interest | $ 8,094 | |
Percentage of late charges | 5.00% | |
Minimum average annual balance | $ 600,000 | |
Additional interest rate on fee | 2.00% | |
Security Agreement [Member] | ||
Revolving Line of Credit (Textual) | ||
Minimum average annual balance | $ 90,000 | |
Mr. Nussbaum [Member] | CNB Note [Member] | ||
Revolving Line of Credit (Textual) | ||
Revolving line of credit, description | The CNB Note is personally guaranteed by Mr. Nussbaum, the Company's Chief Executive Officer pursuant to written guarantee in favor of CNB (the "CNB Guarantee"). Mr. Nussbaum and the Company are obligated to maintain an unencumbered liquidity of no less than $6,000,000 in the form of cash, repurchase agreements, certificates of deposit or marketable securities acceptable to CNB. |
Series 2017 Secured Convertib33
Series 2017 Secured Convertible Note - Related Party (Details) - Series 2017 Convertible Note [Member] - USD ($) | Aug. 03, 2017 | Jun. 30, 2018 |
Series 2017 Secured Convertible Note - Related Party (Textual) | ||
Aggregate principal amount | $ 2,000,000 | |
Promissory note series due date | Aug. 2, 2018 | |
Maturity date | Aug. 2, 2018 | |
Percentage of interest bears variable rate | 0.25% | |
Conversion price per share | $ 1 | |
Drawn against the line of credit | $ 1,500,000 | |
Accrued interest | $ 8,049 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) | Aug. 03, 2017 | Mar. 28, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2016 |
Shareholders' Equity (Textual) | |||||
Stock based compensation | $ 1,203,903 | $ 1,238,168 | |||
Gross proceeds from equity | $ 7,000,000 | ||||
Stock Award Agreements [Member] | |||||
Shareholders' Equity (Textual) | |||||
Stock based compensation | $ 944,300 | ||||
2015 Equity Plan [Member] | |||||
Shareholders' Equity (Textual) | |||||
Aggregate shares of restricted common stock | 1,349,000 | ||||
Shares vest upon consummation of equity and/or debt financing | $ 5,000,000 | ||||
SAB Amendments [Member] | |||||
Shareholders' Equity (Textual) | |||||
Recognized total expense | $ 22,500 | ||||
Restricted common stock, description | The SAB Amendments extend the term of the agreements from May 1, 2017 until April 30, 2018 and provide for the following equity based compensation: (a) for Dr. Frost, a warrant to purchase 2,000,000 shares of the Company's Common Stock (the "Frost Warrant") and an award of 150,000 shares of the Company's unregistered restricted Common Stock and (b) for Mr. Rubin, an award of 100,000 shares of the Company's unregistered restricted Common Stock. The restricted stock vests upon the occurrence of a change of control (as defined in the SAB Amendments). | ||||
Warrant term | 5 years | ||||
Warrant exercise price | $ 1 |
Employee Stock Options (Details
Employee Stock Options (Details) - Stock option [Member] | 6 Months Ended |
Jun. 30, 2018 | |
Summary of assumptions used to estimate fair value of stock options granted | |
Expected dividend yield | 0.00% |
Expected life of options | 4 years |
Minimum [Member] | |
Summary of assumptions used to estimate fair value of stock options granted | |
Expected volatility | 80.00% |
Risk-free interest rate | 2.48% |
Maximum [Member] | |
Summary of assumptions used to estimate fair value of stock options granted | |
Expected volatility | 97.00% |
Risk-free interest rate | 2.85% |
Employee Stock Options (Detai36
Employee Stock Options (Details 1) - Stock option [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Number of Options | ||
Outstanding - Beginning Balance | 7,945,000 | |
Exercisable - Beginning Balance | 7,627,500 | |
Granted | 560,000 | |
Cancelled or Expired | (317,500) | |
Outstanding - Ending Balance | 8,187,500 | 7,945,000 |
Exercisable - Ending Balance | 7,707,500 | 7,627,500 |
Weighted Average Exercise Price per Share | ||
Outstanding - Beginning Balance | $ 1.38 | |
Exercisable - Beginning Balance | 1.35 | |
Granted | 1 | |
Cancelled or Expired | 5.03 | |
Outstanding - Ending Balance | 1.21 | $ 1.38 |
Exercisable - Ending Balance | $ 1.21 | $ 1.35 |
Weighted Average Contractual Life in Years | ||
Outstanding | 3 years 1 month 27 days | 3 years 6 months |
Exercisable | 3 years 1 month 20 days | 3 years 6 months |
Aggregate Intrinsic Value | ||
Outstanding | $ 0 | |
Exercisable | $ 0 | $ 0 |
Employee Stock Options (Detai37
Employee Stock Options (Details Textual) | Dec. 13, 2017Directors$ / sharesshares | Jan. 09, 2017$ / sharesshares | Jun. 01, 2015$ / sharesshares | May 16, 2018Employees$ / sharesshares | Mar. 28, 2018$ / sharesshares | Dec. 31, 2016$ / sharesshares | Jun. 30, 2018USD ($)shares | Dec. 31, 2017USD ($)shares |
Employee Stock Options (Textual) | ||||||||
Options issued | 100,000 | |||||||
Employee Stock Option Two [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Stock options granted | 560,000 | |||||||
Estimate fair value of options and warrants granted | 560,000 | |||||||
Common Stock [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 100,000 | |||||||
Vested options | $ | $ 22,557 | |||||||
Compensation expense recognized | $ | 22,556 | |||||||
Common stock shares issued an option to purchase | 100,000 | |||||||
Exercise price | $ / shares | $ 2.90 | |||||||
Options [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Compensation expense recognized | $ | $ 161,542 | |||||||
Stock options granted | 240,670 | |||||||
2015 Equity Plan [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 200,000 | 200,000 | ||||||
Vested options | $ | $ 59,771 | $ 59,771 | ||||||
Options issued | 200,000 | |||||||
Number of directors | Directors | 2 | |||||||
Compensation expense recognized | $ | $ 36,426 | $ 3,593 | ||||||
Exercise price | $ / shares | $ 1 | |||||||
Stock option expiration date | Dec. 13, 2021 | |||||||
Description of option vests | These options vest 50% after one year and the remaining 50% after two years provided the director is still actively involved with the Company. | |||||||
2015 Equity Plan [Member] | Employee Stock Option One [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 460,000 | |||||||
Vested options | $ | $ 47,933 | |||||||
Options issued | 200,000 | |||||||
Compensation expense recognized | $ | 154,148 | |||||||
Common stock shares issued an option to purchase | 460,000 | |||||||
Number of employees | Employees | 4 | |||||||
Vesting One [Member] | Employee Stock Option One [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 50,000 | |||||||
Options vesting, term | 4 years | |||||||
Vesting Two [Member] | Employee Stock Option Two [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 50,000 | |||||||
Options vesting, term | 4 years | |||||||
Employee [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Options vesting, term | 2 years | |||||||
Exercise price | $ / shares | $ 3 | |||||||
Stock options granted | 10,000 | |||||||
Stock option expiration date | Dec. 6, 2019 | |||||||
Compensation expenses | $ | $ 2,210 | |||||||
Employee [Member] | Vesting One [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 37,500 | 37,500 | ||||||
Exercise price, granted | $ / shares | $ 10.80 | |||||||
Expiration date | May 4, 2019 | |||||||
Compensation expense recognized | $ | $ 14,369 | |||||||
Options vesting, term | 3 years | |||||||
Kendall Carpenter [Member] | 2015 Equity Plan [Member] | Employee Stock Option One [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Options issued | 130,000 | |||||||
Robert Guerra [Member] | 2015 Equity Plan [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Vested options, shares | 100,000 | |||||||
Vested options | $ | $ 31,195 | |||||||
Options issued | 100,000 | |||||||
Compensation expense recognized | $ | $ 7,394 | |||||||
Exercise price | $ / shares | $ 1 | |||||||
Stock option expiration date | Mar. 28, 2022 | |||||||
Description of option vests | These options vest 50% one year after the date of grant and the remaining 50% two years after the date of grant provided the director is still actively involved with the Company. | |||||||
Reginald Brown [Member] | 2015 Equity Plan [Member] | ||||||||
Employee Stock Options (Textual) | ||||||||
Exercise price | $ / shares | $ 1 | |||||||
Stock option expiration date | May 16, 2022 | |||||||
Description of option vests | Two engineers received a total of 130,000 shares which vest 50% after one year and the remaining 50% after two years, are exercisable at an exercise price of $1.00 per share and expire May 16, 2022. |
Warrants (Details)
Warrants (Details) - Warrants [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Number of Warrants | ||
Outstanding - Beginning Balance | 2,232,500 | |
Exercisable - Beginning Balance | 2,232,500 | |
Granted | 0 | |
Forfeited or Expired | (37,500) | |
Outstanding - Ending Balance | 2,195,000 | 2,232,500 |
Exercisable - Ending Balance | 2,195,000 | 2,232,500 |
Weighted Average Exercise Price per Share | ||
Outstanding - Beginning Balance | $ 1.36 | |
Exercisable - Beginning Balance | 1.36 | |
Granted | 0 | |
Weighted Average Exercise Price per Share, Forfeited or Expired | 10 | |
Outstanding - Ending Balance | 1.21 | $ 1.36 |
Exercisable - Ending Balance | $ 1.21 | $ 1.36 |
Weighted Average Contractual Life in Years | ||
Outstanding | 3 years 10 months 28 days | 4 years 4 months 2 days |
Exercisable | 3 years 10 months 28 days | 4 years 4 months 2 days |
Aggregate Intrinsic Value | ||
Outstanding | $ 0 | |
Exercisable | $ 0 | $ 0 |
Commitments and Contingencies39
Commitments and Contingencies (Details) | Jun. 30, 2018USD ($) |
Commitments and Contingencies [Abstract] | |
Year 2,018 | $ 36,150 |
Year 2,019 | 77,309 |
Year 2,020 | $ 45,651 |
Commitments and Contingencies40
Commitments and Contingencies (Details Textual) | 1 Months Ended | 6 Months Ended |
Nov. 17, 2014m² | Jun. 30, 2018USD ($) | |
Commitments and Contingencies (Textual) | ||
Term of lease | 60 months | |
Area of office and manufacturing | m² | 5,533 | |
Operating lease, description | The actual commencement date was July 1, 2015 and the lease was amended to 61 months expiring July 31, 2020. | |
Operating expenses and sales tax | $ 5,915 | |
Rent expense | $ 44,474 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events [Member] | Jul. 30, 2018USD ($) |
Series 2017 Convertible Note [Member] | |
Subsequent Events (Textual) | |
Amount of drawn under note | $ 150,000 |
CNB Note [Member] | |
Subsequent Events (Textual) | |
Amount of drawn under note | $ 150,000 |